Physical demand for coins and bars internationally continues and is
the strongest since the immediate aftermath of the Lehman Brothers
collapse on September 15, 2008, and the consequent global financial
crisis.

Government mints, refiners and bullion dealers internationally are
reporting demand as high as in the aftermath of the Lehman crisis.

Brokerages are seeing nearly all buyers and little or no sellers
which is making for a tight market with rising premiums. At GoldCore,
sellers have been people liquidating unallocated positions and opting
for taking physical possession or the increased safety of allocated
accounts.

Higher prices will be needed by bullion owners in order to
incentivise them to sell – prices that will likely be significantly
higher.

Most physical owners are buying for the long term and will not sell
in the coming months even when prices recover. If prices rise to back
above $1,600/oz, some physical gold might come back into the market and
alleviate the supply issues.

However, we believe that this may be a long term structural supply

demand issue in what is a very small physical bullion market, that will

only be alleviated by much higher prices and indeed higher premiums.

It is difficult to generalise regarding premiums as there are so many
products and so many regions but in general terms, prices on nearly all
small coins and bars are rising and on average there have been 1% to 2%
rises in the premiums on popular one ounce gold coins and bars. This
means that one ounce coins and bars can cost some $14 to $28 more than
they did prior to the price falls.

The percentage increase in premiums in the silver market is even
higher and there are more delays and unavailability of silver coins and
bars with popular formats such as Eagles and Maples now almost difficult
to secure. We acquired a large number of Silver Eagle Monster Boxes
yesterday which we expect to have sold by the close today.

Today, return of capital is of far more importance than return on capital.

Gold and silverbullion coins and bars are important in this regard

as they are not about making a capital gain per se rather they are about
wealth preservation.

Given we are in an era of competitive currency devaluations, there is
also the real possibility of making significant capitalgains.

Of fundamental importance is the fact that gold and silver coins are
not ‘investments’ rather they are a safe form of money and an important
form of financial insurance that everybody should own.

With the risk of a global depression remaining very real, people need
to own the financial insurance that bullion coins represent. Bullion
coins are like health insurance in that you should own them but hope you
never have to use them.

The biggest benefit of owning gold coins either in your personal
possession or allocated in secure vaults internationally is that they
will always retain a value unlike paper assets and currencies which have
considerable counter party risk today – as was seen in the deposit
confiscation in Cyprus.